Final answer:
The statement that a higher growth rate in sales will often require more external funds is true, as firms need significant investment to expand operations, for which they might seek borrowing or issuing stock.
Step-by-step explanation:
The statement 'A higher growth rate in sales will often require more external funds' is generally true. When a firm experiences a higher growth rate in sales, it often needs to expand its operations, buy new equipment, or build new facilities to meet the increased demand for its products or services. This expansion typically requires significant investment, and when a firm's internal sources of funds, like profits, are not sufficient to cover these investments, it may need to seek external financing. External funds can be obtained through borrowing or issuing stock, and each of these methods has its own set of advantages and considerations. For instance, borrowing can provide the necessary funds without diluting ownership, while issuing stock can raise capital but at the cost of sharing future profits with new shareholders. The need for external funds to support business investment is one of the key components needed to sustain economic growth.