Mr Chan withdraws HK$4 000 000 from his deposit account in a restricted licence bank in Hong Kong. He then puts HK$3 500 000 as time deposit in a licensed bank in Hong Kong and holds the remaining HK$500 000 as cash.
The immediate effect of the above actions on the Hong Kong dollar money supply would be:
A. Both M2 and M3 remain unchanged.
B. M1 increases while M2 remains unchanged.
C. M2 increases while M3 remains unchanged.
D. M2 increases while M3 decreases.