How would you cite a quotation within a quotation in your paragraph?
The same way that you would cite a quotation, but instead of surrounding the quote with quotation marks "the quote", you'd use apostrophes ' the quote'
Or you can cite the work you are working with and explain in the text that your source is quoting someone else. According to Weems, the young Washington said, "I can't tell a lie, Pa; you know I can't tell a lie. I did cut it with my hatchet." (Mason Locke Weems, The Life of Washington. p 10) You don't want to cite the inside quotation if you don't look at the original yourself because your source could have made it up, interpreted it incorrectly, or flubbed it somehow to start with. So, for instance I would not want to cite George Washington for the above quote. You can also use block quoting - set the entire paragraph off (larger margins etc) and quotes and citations like normal. You just may need [parentheticals] to make sure the sources and attributions are clear.
Example: Joe said, "Hamlet said 'to be or not to be'".
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