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in writing, arbitrary shortening of a word, usually by cutting off letters from the end, as in U.S. and Gen. (General). Contraction serves the same purpose but is understood strictly to be the shortening of a word by cutting out letters in the middle, the omission
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acronymA word typically made up of the first letters of two or more words; for example, BASIC stands for "Beginners All purpose Symbolic Instruction Code." Letters within a word are also used; for example, XML means "eXtensible Markup Language."
Technically, if only first letters are used, the term is an "initialism," but this distinction is not widely made. For an excellent acronym resource, visit www.acronymfinder.com. See backronym.