Question

which describes the action of the diaphragm and chest cavity when you exhale and squeeze air from the lungs?

Answer 1

The action of the diaphragm and chest cavity when you exhale and squeeze air from the lungs is that it relaxes and moves upward into the chest cavity. To reduce the space in the chest cavity the intercostal muscles between the ribs also relax.  

Answer 2

The fact that the diaphragm moves upward and the chest cavity becomes smaller describes the action of the diaphragm and chest cavity when you exhale and squeeze air from the lungs.

During inhalation muscles increase the size of the thoracic (chest) cavity and expand the lungs. This increases their volume, so pressure inside the lungs decreases. As a result, outside air rushes into the lungs.