In 1971 a grown Buddy returns to his former family home and reflects back on his youth during The Great Depression when Rose (Laura Dern) came to live with his family in order to escape her miserable life in Birmingham where she was being forced into prostitution. The Hillyers are an eccentric family who take Rose in as a domestic servant. Rose quickly begins to admire Mrs. Hillyer (Diane Ladd) who is working on her doctoral dissertation and whom she learns was orphaned at a young age, just as Rose had been. Rose also develops a crush on the paternal and warm Mr. Hillyer that the three Hillyer children and Mr. Hillyer become aware of while Mrs. Hillyer remains oblivious.
Eventually Rose kisses Mr. Hillyer who at first responds to her advances and then becomes angered at her and rebuffs her. Buddy witnesses Rose and Mr. Hillyer kissing and later, when Rose comes to talk to him at night, he repeatedly tries to grab and massage her breast just as his father had done while he was kissing Rose. Eventually to satisfy his curiosity Rose allows 13 year old Buddy to masturbate her. Afterwards she is apologetic and upset and begs him not to tell anyone.
The Hillyers begin to disagree about Rose's presence in their lives. Mr. Hillyer worries that Rose is too promiscuous and will begin to make their lives miserable but Mrs. Hillyer sees her promiscuity as her way of trying to obtain love and attention.
Strange men begin lurking around the house. Mr. Hillyer attributes this to Rose but she repeatedly denies knowing them. However, Rose is eventually arrested when some of her men begin brawling in a bar and she bites the finger of a policeman. Though the police and Mrs. Hillyer are willing to forgive Rose, Mr. Hillyer insists on firing her, but before he can Rose is hospitalized with pneumonia. The attending doctor reveals that Rose is likely not the poor country girl she portrayed herself as. After she recovers, Rose seems to be on her best behaviour but Mr. Hillyer eventually catches her with a man in her room. He fires her and obtains a position on a dairy farm in Tennessee for her. When he informs Rose she begins crying as she does not want her future child being born on a farm.
Mr. Hillyer believes she is lying about being pregnant and the Hillyers take her to a doctor where they learn that while she is showing signs of being pregnant she actually has an ovarian cyst and is sterile because of untreated gonorrhoea contracted when she was 15. The doctor recommends a hysterectomy in order to control Rose's promiscuous behaviour. While Mr. Hillyer at first agrees to the operation Mrs. Hillyer argues against it and eventually persuades the two men. Rose is treated for her cyst and returns home where she eventually marries her first husband, David, the policeman whose finger she bit. In 1971, Buddy reveals that Rose married three more times and was eventually happy and faithful to her last husband. He goes to talk to his father who tells him that Rose died the previous week. When Buddy begins crying Mr. Hillyer tells him that Rose is a person who will never really die as she will live on forever in their hearts.

Question: What does Mr. Hillyer think about Rose's being pregnant?
Answer: That she is lying. 
Alternative answer: He thinks she is lying about it.