Final answer:
A decrease in confidence in the U.S. economy could lead to a reduction in the supply of financial capital as foreign investments decline, causing higher borrowing costs for Northern and affecting its financial condition and performance.
Step-by-step explanation:
When assessing Northern's financial condition and performance in the context of diminished confidence in the U.S. economy as a place to invest, one can expect that there would be an impact on the supply of financial capital. Many foreign investors who traditionally looked to the U.S. for investment in secure financial vehicles with low risk and stable returns might start perceiving U.S. financial assets as riskier. This shift in perception could lead to a reduced inflow of financial capital to the U.S., thereby raising the cost of capital for businesses.
The competition between businesses and the government for financial resources could result in businesses facing higher borrowing costs. As the U.S. debt increases and a greater portion of income is devoted to debt servicing, there might be fewer resources available for investment in private ventures. This scenario influences Northern's abilities to secure investment and affects overall business operations and financial planning.