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In American English, "fag" is used as an abbreviated form of "faggot", a pejorative term for gay men. This meaning has also become understood as an Americanism in British English, primarily due to the use of it on film and television series imported from the United States.
Also, young Americans, upon recognition of the British use of the word "fag" for cigarette, will sometimes call each other "cigarette", as this is an amusing and indirect way for calling someone a "fag".
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