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Take this as you will, but this is how I see it. The correct answer  is "Modify the source through the 'ip flow-export source loopback 1' command", as indicated for the reasons below.

A. Wrong, Loopback 2 already has an address as shown in the output, 172.16.1.1
B. Wrong, Does not need to be public address unless leaving your AS.
C. Correct, Loopback 2 is shutdown as indicated the (Unknown) next to the source ip under “show ip flow export”.  Assuming that Loopback 1 is not shutdown and has an IP address then C is the correct answer.
D. Exports happen even without the ip flow egress command on the loopback

There is no mention of loopback 1 in the exhibit. The issue here is that loopback 2 is shutdown. Bringing it up and ensuring it has a valid IP 172.16.1.1 will resolve the issue. The act of reconfiguring the IP (even if the IP is already assigned) will also bring attention to the need to ensure the interface is not administratively down. Hence it is the best choice.