Having a shape appear cutout is a great way to add dimension and interest to a layout. And in Photoshop it's super easy! You just need to apply the right layer style.
First on my Photoshop canvas I have opened two papers. I've hidden the one on top for now, and in between these two paper layers I'm going to make a new layer. On this new layer I'm going to make a circle using the custom shape tool.
Next, I've turned the hidden paper layer back on and I'm going to clip it to the circle by right clicking on the paper and choosing "create clipping mask."
Now, it's time to apply the style. Double click on the circle layer and apply the following (you can of course change up the values for a different look). The key here is that we are using an "inner shadow" rather than a "drop shadow."
Finally, your circle will now look like it's been cut out of the paper on the bottom even though it's on the top!
It's super easy to readjust the look of your page by moving the circle wherever you'd like it to be.