May I ask the questions? I think that the word "make-believe" can perform as a noun and an adjective, not a verb. So I don't think we can use the sentence "Are you make-believing that the chair is a car?"
If we would like to use the word "make believe" as a verb, there should not have "-" between the word "make believe". Also if we would like to use this word in the present continuous tense, we should add -ing after "make" for example "Are you making believe that a chair is a car?"
What do you think? If I misunderstand any point, please kindly give me the suggestions. Thank you in advance.