Answer:
The correct labeling is shown in the picture below.
Oxygen from outside the body reaches the alveolar site in the lungs through inhaling.
At alveolar site, oxygen diffuses into the hemoglobin of the red blood cells (RBC).
RBC then carry the oxygen in the dissolved form to all cells and tissues of the body where it is used for cellular respiration.
Cellular respiration produces carbon dioxide as the byproduct which is also carried in the dissolved form with the help of RBC.
The RBCs take carbon dioxide to the alveolar site where it is exchanged and is excreted out as a part of exhaled air.