A child caught lying to his friends will be humiliated as the friends chant this false rhyme:  “Liar, liar, pants on fire.”  (It is a false rhyme because liar and fire do not actually rhyme—liar has two syllables and fire only one.  The children chanting the rhyme will pronounce fire as though it had two syllables).

Of course, the lying child will deny being a liar, but children are merciless sometimes.  Probably that is better for the lying child than the more polite way a mature adult handles a liar—by saying nothing.  The notion of one’s pants being ablaze suits a child’s notion of the “heat” of being caught in a lie.

Notice: one is “caught in a lie.” 

Some lies are serious, others minor.  A minor lie is sometimes excused as being “only a fib” or even, “only a little fib.”  Fibs are lies of little import.  It is presumed they do no harm and even do good—although there is another expression, the white lie, which is used to refer to a lie that has a positive purpose (such as a lie told to avoid hurting someone’s feelings).

There is another kind of lie, called a fish story, which usually contains a grain of truth.  Exaggeration is the “sock in trade” of amateur fisherman when describing the fish that “got away.”  There is a subtle difference between exaggeration and hyperbole.  Both involve inserting an element of falsehood into an otherwise true story in order to make the story more interesting or better in some way. 

Hyperbole is a figure of speech that describes a type of exaggeration where everyone knows what is being said is an exaggeration.  If you say, “There were millions of birds in the sky,” we all know that “millions” is not intended literally but only as a way of saying, there were lots and lots of birds there.  Advertising (where there is a legal burden to tell the truth) sometimes uses hyperbole to get around the truth, since if it is obvious the claim could not be literally true, it must be a hyperbole, and therefore allowed.