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That is a function word used in the English language for several grammatical purposes.These include:

as a complementizer/subordinating conjunction. ("He asked that she go.")
to introduce a restrictive relative clause ("The test that she took was hard.") In this role, that may be analyzed either as a relative pronoun or as a conjunction as in the first case; see English relative clauses: That as relativizer instead of relative pronoun.
as a demonstrative pronoun ("That was hard.") (plural: those)
as a demonstrative adjective ("That test was hard.") (plural: those)
as an adverb ("The test wasn't that bad.")In the first two uses the word is usually pronounced weakly, as /ðət/, whereas in the other uses it is pronounced /ðæt/.
In the Old English language that was spelled þæt. It was also abbreviated as a letter Thorn, þ, with the ascender crossed, ꝥ ( ). In Middle English, the letter Ash, æ, was replaced with the letter a, so that that was spelled þat, or sometimes þet. The ascender of the þ was reduced (making it similar to the Old English letter Wynn, ƿ), which necessitated writing a small t above the letter to abbreviate the word that ( ). In later Middle English and Early Modern English the þ evolved into a y shape, so that the word was spelled yat (although the spelling with a th replacing the þ was starting to become more popular) and the abbreviation for that was a y with a small t above it ( ). This abbreviation can still be seen in reprints of the 1611 edition of the King James Version of the Bible in places such as II Corinthians 13:7.
That is often omitted when used to introduce a subordinate clause—"He told me that it is a good read." could just as easily be "He told me it is a good read."

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