Gaseous exchange of oxygen and carbon dioxide between alveolar air and capillaries takes place by

The correct option is C Diffusion.
Diffusion is a phenomenon in which molecules move from an area of high concentration to an area of low concentration. An example of this process is gaseous exchange of oxygen and carbon dioxide between alveolar air and capillaries. The blood in the capillaries surrounding the alveoli has a lower concentration of oxygen than the oxygen in the inhaled air. Hence, O${}_2$ diffused from the alveoli to the capillaries. The blood in the surrounding capillaries has a higher concentration of carbon dioxide than the inspired air. Hence, CO${}_2$ diffuses from the capillaries into the alveoli where it is then exhaled.

Thus, the correct answer is option B.