Question

When a neutral atom undergoes oxidation, the atom’s oxidation state(1) decreases as it gains electrons(2) decreases as it loses electrons(3) increases as it gains electrons(4) increases as it loses electrons

Answer 1

The acronym "OILRIG" can be used to remember this: Oxidation is Losing electrons, Reduction is Gaining electrons. Therefore, when an atom undergoes oxidation, it loses electrons. This makes its net charge more positive, so its oxidation state increases.
This best fits choice (4).

Answer 2

When a neutral atom undergoes oxidation, the atom's oxidation state increases at it lose electrons.