Fire-breathing dragons exist.

Meaning: This means that the speaker believes that dragons that breathe fire are real. It's like saying, I believe that there are dragons that can breathe fire.

Choice of Words: Fire-breathing means having the ability to breathe out fire. Dragons are mythical creatures that are often depicted as large, reptilian beings that can breathe fire. When you put them together, "Fire-breathing dragons exist" is a statement that suggests that dragons that breathe fire are real.

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Related Expressions