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You can't just say that such questions are none of their business, but you do have to politely but firmly sidestep. Be honest but do not spend a lot of time in this area. Keep the focus on this job and what you can do for this organization. Anything else is a distraction.
A sample answer could be: " I am looking at another job that has good potential like the one we're talking about. However, I really like the career development opportunities in what we're discussing".
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