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We use this expression to disagree with someone's opinion or to indicate that we know something they don't.
Written: No
Spoken: Yes
Formal: No
Informal: Yes
Example 1
Paolo can't come out tonight because he's doing his homework.
That's what you think. He told me he's seeing his new girlfriend.
Oh!
Example 2
Manchester United are sure to win tonight.
That's what you think. Personally, I think Barcelona are a much better team.
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