(c) That's wrong.
You were asked to select the incorrect statement.
It is correct to say that the Commonwealth of Australia is a federation of former colonies, now known as states, and ten territories, two of which are self-governing.
It is correct to say that the Commonwealth of Australia was established by an Act passed in 1900 by the British parliament.
It is incorrect to say that the Commonwealth of Australia is a single state, formed when the former Australian colonies and ten self-governing territories agreed to merge together.
Give yourself no marks for this answer.
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