"Where is she living? In Japan."
Translation:Càit a bheil i a' fuireach? Ann an Iapan.
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They are both correct at any point. I don't recall exactly what the Tips said, but I think càite is said to be the original spelling. However, in modern Gàidhlig, the word is ALWAYS followed by 'a bheil' so the e in càite is not actually pronounced; it gets lost between the consonant 't' and the partical 'a.' The spelling has been changed in modern times to reflect the pronunciation.