How does Nick know Daisy and Tom?

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Nick knows Daisy because they are sort of related.  They are cousins.  To be more specific, they are second cousins once removed.  Nick knew Tom when they were both in college together at Yale.  They also spent some time together in Chicago right after the end of World War I, but he had already known them from before.

You can find the answer to this question in Chapter 1.  This is very early on where Nick goes over to see Daisy in East Egg and meets Jordan Baker for the first time.

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