Heterogeneous expectations can make it tricky for policies to stabilize the economy. In a Neo-Classical economy, different expectations can affect how well policies work. A monetary policy rule that uses current data can work well with passive fiscal/active monetary policies if it considers different expectations. But if the fiscal policy is active and the monetary policy is passive, things can get unstable due to different expectations. However, this can still be a stable situation. When it comes to practical monetary policy rules, the results are more in line with the active fiscal/passive monetary policy scenario. Overall, both policy setups can lead to good business cycle dynamics if they are done right.