"Another Sprite?" "Oh, it's okay."
"Are you sure you don't want to go to the fair?" "It's okay. Just go."
It functions very similarly to "I'm fine." My mom insists that this is not any sort of English she ever heard before my brother and I went to school, but at school the students used it and it was understood. So my question for you: did/does anyone else use this phrase the way my fellow students and I did/do?
Thanks in advance!
EDIT: It was apparently not clear to some commenters that the phrase I was referring to was "it's okay" and not "I'm okay," the latter of which is no doubt a widely accepted response in conversational English.