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When the heart pumps blood to the lungs, the blood is full of carbon dioxide.  The blood cells drop off the carbon dioxide, and the lungs breath it out when you exhale.
The lungs have tiny air sacs called alveoli.  The blood arrives from the pulmonary artery.  It travels through capillaries in the alveoli, where the exchange of carbon dioxide and oxygen happens.  It then returns to the heart through the pulmonary vein.
When you inhale, the lungs breath in oxygen.  The blood cells pick up this oxygen, then return to the heart.

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