Question

Are the lungs above the diaphragm? Are the lungs muscular?

Answer 1

Yes and No

Explanation:

The diaphragm is located at the base of the ribs, below the lungs.
The diaphragm a muscular structure that when contracted you can say it increases the area of the chest cavity. The increase in area creates a negative pressure causing ambient air to rush into the lung. When the diaphragm relaxes the chest cavity area shrinks pushing the air out of the lungs. (You have or will learn about pressures in chemistry) The lung tissue itself is not muscular. However, there is smooth muscle on the vasculature of the lungs that controls blood flow.
Inspiration is an active process and expiration is a passive process, unless you are exhaling forcefully.
Maybe more info then you were looking for but you're going to learn it anyway.