Option 1 -> Export = Import means balanced trade with no deficit or surplus.
Option 2 -> Export > Import indicates a trade surplus, not a deficit.
Option 3 -> Export < Import means imports exceed exports, creating a trade deficit.
Option 4 -> This equation involves external borrowing to finance deficits, not the condition for a deficit.
Hence, **Option 3: Export < Import** -> A trade deficit occurs when a country's imports exceed its exports. This means the country is buying more goods and services from other countries than it is selling to them. The difference must be financed through borrowing or drawing down foreign reserves. For example, if a country exports 100 billion worth of goods but imports \150 billion, it has a trade deficit of $50 billion. -> correct