Why does the money supply grow by an amount much greater than the initial amount of a loan made by a

it is called the money multiplier effect.

Suppose you deposit $100 in a bank and all banks have a reserve requirement of 10%. That bank will loan out $90 to someone who buys a house or car or wnatever from someone who puts the $90 in a bank that in turn loans out $81 and this process continues until the last transaction approaches $0.

In the end 100/(0.1)=$1,000 is added to the money supply.