It's nonfiction because it talks about a true story
If you look at their conversation, the two women the one that let her friend borrow it showed a surprised action there. The woman should have told her but instead she didn't so in the middle of the story is when you really have details to help you figure the ending out. which is that the woman who borrowed it should have never lied about it and the woman who let her should have told her that it was fake
Every gerund has the same form - verb + -ing. So, having that in mind, the word <em>sleeping </em>is used as a gerund in this sentence, but it is also a subject of the sentence.