Check out example codes for "enable provider plugin cache in terraform". It will help you in understanding the concepts better.

Code Example 1

To enable the plugin cache, use the plugin_cache_dir 
setting in the CLI configuration file

 <plugin_cache_dir> = "$HOME/.terraform.d/plugin-cache"

Environmental Variable used to enable Plugin:---->
  
 <TF_PLUGIN_CACHE_DIR environment variable> 
 can be used to enable caching or to override an existing cache directory 
 within a particular shell session.

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