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The way how you should answer "how are you?" depends on who is asking. If you are talking to your boss, clients, acquaintances or strangers, your response should be more formal. If you are speaking to friends and family, you can be more casual.
Here are some of the appropriate answers you could use.
1. Good.
2. Great.
3. Fine.
4. Alright.
5. Not bad.
6. So so.
Bear in mind that if you answer "fine" or "alright", use a positive tone and smile. If you say it slowly or say it with a frown or neutral expression, it can actually mean you are not doing so well afterall.
When you are greeting close friends and family, or co-workers you know very well, you can be more casual.
Here are some of the appropriate answers.
1. Okay.
2. Great.
3. I've been better.
4. I'm hanging in there.
5. I am busy / stressed out.
Both #3 and #4 are negative and you are inviting the speaker to ask you what is wrong.
Don't forget to say "thanks" after your answer and ask the person.
"How about you?"
"And you?"
"And yourself?"
What you shouldn't say:
1. "So far so good". Don't say "so far so good" unless you intend to be humourous.
2. Not good. Note that when a person asks "how are you?", it is just a greeting. The person doesn't really want to know if you are doing good or not, especially somebody you don't know that well. So don't give a negative answer and babble on what a lousy day you have had.
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