yarn
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yarn
A thread made of spun-together fibers such as wool, cotton, or synthetic material, used for knitting, crocheting, or weaving.
Für diesen Schal benötigst du zwei Knäuel von dem blauen Garn.
For this scarf, you need two balls of the blue yarn.
The two meanings are easy to distinguish. When 'Garn' (yarn) is used together with the verb 'spinnen' (to spin), it almost always has the figurative meaning 'to tell stories'. In other contexts, it refers to the thread.
Er spinnt schon wieder sein Garn über seine angeblichen Abenteuer.
He's spinning his yarn again about his supposed adventures.
As a material, 'Garn' (yarn) is usually uncountable. When referring to a specific amount, you use units of measurement such as 'ein Knäuel Garn' (a ball of yarn) or 'eine Rolle Garn' (a spool of yarn).
Für den Pullover habe ich drei Knäuel Garn verbraucht.
I used up three balls of yarn for the sweater.
The idiom 'Garn spinnen' (to spin a yarn) means to tell incredible or made-up stories. It is often expanded to 'Seemannsgarn spinnen' (to spin sailor's yarns), which alludes to the fantastic stories told by sailors.
Glaub ihm nicht alles, er spinnt gerne mal ein bisschen Garn.
Don't believe everything he says; he likes to spin a bit of a yarn sometimes.
wool
'Wolle' and 'Garn' can be very close in meaning when knitting, crocheting, or weaving. In everyday language, 'Wolle' often means the yarn used for knitting, especially when it is soft and intended for clothing. 'Garn' is more general: it is a thread made from fibers and can consist of wool, cotton, or synthetic material. For this reason, learners may confuse the words. When the material or everyday knitting is meant, 'Wolle' often sounds natural. When speaking more precisely about the thread or different materials, 'Garn' fits better.
Frau Müller nimmt dünnes Garn, um die kleine Decke zu häkeln.
Mrs. Müller uses thin yarn to crochet the small blanket.
Am Abend sucht sie die rote Wolle, weil sie weiterstricken möchte.
In the evening, she looks for the red yarn because she wants to keep knitting.