Mr Chan withdraws HK$50 000 from his savings account with a bank in Hong Kong and remits HK$40 000 through a bank to the U.K. He changes the remaining HK$10 000 into the newly issued HK$10 notes and puts them into his safety deposit box in a bank.
Which of the following would be the immediate effect of the above actions on the Hong Kong dollar money supply?
A. Both the HK$M2 and M3 will decrease by HK$40 000.
B. HK$M1 will increase by HK$10 000 while HK$M2 will decrease by HK$50 000.
C. HK$M2 will decrease by HK$50 000 while HK$M3 will remain unchanged.
D. HK$M1 will remain unchanged while HK$M2 will decrease by HK$40 000.