If I visit 1 website http://www.abc.com that has a reference to say jQuery hosted at Google Code, and then I visit a 2nd website http://www.xyz.com that has the same reference – will the file be cached across both websites? i.e. will it re-download it on the 2nd website, or just use it from cache?
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Yes.
Also, if you use Google’s loading api you get even faster loads then by just using the cache as it will use Google’s CDN. For example: