Answer:
Europe was called a "powder keg" because it was a very volatile environment caused by major claims for territory involving powerful powers and their allies.
Explanation:
First of all, we need to understand the concept. The powder keg term refers to a very volatile and explosive object. Taking as reference a barrel of gunpowder.
Second, Europe was considered a "powder keg" before WWI because there were territory claims for the Balkans. Also, because there were strong alliances established between major powers and smaller states. Two of them consisted of Russia, France, and Britain. And, Germany with Austria-Hungary and smaller states like Serbia, Bulgaria, Italy, and the ottoman empire. So, there were a lot of countries involved. That could drag a major conflict in a bast amount of area.