When using a sleeping bag for a 2 week old baby, is it recommended to use one with or without arms out?

A sleeping bag is generally accepted as being one with “arms out” whereas a swaddle bag/suit would have arms in - as when baby is swaddled.
Most babies would be swaddled/wrapped from birth - Red Nose recommends using a light cotton or muslin wrap.
Discontinue wrapping when baby is attempting to roll
Wrapping/swaddling info here:
https://rednose.org.au/article/safe-wrapping-or-swaddling-when-to-stop-and-how-to-select-a-safe-sleep-bag

A safe sleeping bag is one that fits well, particularly around neck & armholes & has no hood.
https://rednose.org.au/article/what-is-a-safe-sleeping-bag