"this is" instead of "that is"

[milka way]

English Language Tests, Intermediate level

ESL/EFL Test #118 "Verb Tenses", question 4

......... all right.

(a) This is
(b) That's
(c) There is
(d) That ha

English Language Tests, Intermediate level

ESL/EFL Test #118 "Verb Tenses", answer 4

That's all right.

Correct answer: (b) That's

Your answer was: incorrect
This is all right.
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why do we choose "this is" instead of " that is"?

[Alan]

Hi milka way,

The difference is : This is refers to something here and now as in: This is the car (here it is) I have bought.
That is refers to something there and then as in: That is what you said (a few minutes ago).

Alan
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English as a Second Language
You can read my ESL story Prepositions