The exchange of gases that occurs between the lungs and the blood is called

External respiration

It is a process where oxygen from the lungs diffuse into the blood and carbon dioxide collected from the cells, goes into the alveolar space of the lungs. It is also called as breathing, where air from outside is inhaled through the nose and goes to the lungs. From there it goes through the blood to every cell of the body.

option c is the correct answer.