On GMAT, you would generally expect "that" in such cases.

Verbs such as "thought", "believed", "claimed", "suggested" etc. are followed with "that".

ceilidh.erickson wrote:THAT in your example is setting up a subordinate clause. Think of it this way:

She thought [something].

Here, the thing that she thought is the idea that the puppy is cute. Whenever the object of the verb is an idea/clause like this, it should be preceded by a THAT.

However, in common English usage, the "that" is so often dropped that it's considered grammatically ok to do so; the "that" is implied. However, as EducationAisle said, the GMAT will always adhere to the stricter rule, and use THAT every time.

Don't worry, though, they'll never ask you to choose between two sentences like this!

thank you ! ceilidh.erickson

While ceilidh is correct that there might never be two options on GMAT where the presence/absence of "that" is the only difference, this is actually quite a handy thing to remember.

You might want to look at few OG examples:

Q# 38 in OG13 diagnostic section:
Some of the wrong options:
....the studies indicate dolphins as capable....
....the studies indicate dolphins' ability to recognize....
....the studies indicate dolphins to be capable of recognizing....

Correct option:
....the studies indicate that dolphins are capable of recognizing...

Q# 41 in OG13 diagnostic section:
Wrong option:
...the discovery of inscribed shards dating to circa 2800-2600 B.C. indicate their development..

Correct option:
...the discovery of inscribed shards dating to circa 2800-2600 B.C. indicates that the development..

Q# 10 in OG13:
Some of the wrong option:
...big bang theory holds the beginning of the universe...
...big bang theory holds the universe to have begun...

Correct option:
...big bang theory holds that the universe began in...

EducationAisle wrote:While ceilidh is correct that there might never be two options on GMAT where the presence/absence of "that" is the only difference, this is actually quite a handy thing to remember.

You might want to look at few OG examples:

Q# 38 in OG13 diagnostic section:
Some of the wrong options:
....the studies indicate dolphins as capable....
....the studies indicate dolphins' ability to recognize....
....the studies indicate dolphins to be capable of recognizing....

Correct option:
....the studies indicate that dolphins are capable of recognizing...

Q# 41 in OG13 diagnostic section:
Wrong option:
...the discovery of inscribed shards dating to circa 2800-2600 B.C. indicate their development..

Correct option:
...the discovery of inscribed shards dating to circa 2800-2600 B.C. indicates that the development..

Q# 10 in OG13:
Some of the wrong option:
...big bang theory holds the beginning of the universe...
...big bang theory holds the universe to have begun...

Correct option:
...big bang theory holds that the universe began in...

thanku Ashish