Maximum possible expansion of deposits = Initial deposit x 1/rr
= $500 * 1/ 20
= $2500
Thus, the maximum possible expansion of money deposits could be $2500.
Money held in a bank is referred to as a deposit in the financial industry. A deposit is a transaction in which money is transferred to a different party for safekeeping. A percentage of money used as collateral or security for the supply of a good can also be referred to as a deposit. A deposit might have two different meanings. In one type of deposit, money is given to someone else to keep safe. By this definition, a deposit is any cash that an investor deposits into a savings or checking account with a bank or credit union.
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