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The assembler keeps track on the amount of memory used for each instruction/variable:
main:
add r0, r0, r0
...
L1:
add r0, r0, r0 // 4 bytes
add r0, r0, r0 // 4 bytes
L2:
add r0, r0, r0
...
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The assembler will equate a label with the current memory address when it encounters a label (e.g.: L1:):
Demo program: /home/cs255001/demo/asm/1-directives/labels.s