Paper bags are made out of paper. The first step in making a paper bag is to cut the paper into a rectangular shape. The next step is to fold the paper in half and crease it. After that, you need to cut two slits on the folded side of the paper. The next step is to open up the paper and fold the bottom half of the paper up to the top half. The next step is to fold the side of the paper inwards and crease it. The last step is to fold the paper in half and crease it again.