Once you have placed a photo, element or overlay on your document, you may wish to resize it.
Begin by getting the Move Tool.
Select the layer of the item you wish to resize.
Move your cursor to the corner of the image you are resizing. Each corner will have a small square.
(Note: If you are resizing a very large image, you may need to zoom out repeatedly to find the corner.)
When your cursor reaches the corner, it will turn into a diagonal line with an arrow at each end.
In Photoshop and early versions of PSE, Hold the Shift Key on your keyboard as you click and drag toward the center of the image to reduce the image. To increase the size, shift, click and drag away from the center of the image.
In later versions of PSE, do NOT hold the Shift key as you click and drag.
Holding the Shift key in Photoshop keeps the image from becoming distorted as you resize it. Adobe reversed this behavior in the later versions of Photoshop Elements.
Be careful enlarging with this method. Greatly enlarging an image reduces the resolution and can result in a pixelated appearance.
Do not resize using the side handles of the item. These are located on the straight edges - resizing using the side handles distorts the image, creating a funhouse effect.