A) $v_m = v_e $
B) $v_m > v_e $
C) $v_m < v_e $
D) Data is insufficient to conclude
Let's say in certain small time (say, $\Delta t$) the block moves up by $y_2 - y_1 = \Delta y $ distance.
Since the length of the string is constant (say, l), the end point goes down by distance $\left( {l - \sqrt {{a^2} + y_1^2} } \right) - \left( {l - \sqrt {{a^2} + y_2^2} } \right)$ in the same time.
${v_m} = \frac{{\Delta y}}{{\Delta t}}$ and ${v_e} = \frac{{\left( {l - \sqrt {{a^2} + y_1^2} } \right) - \left( {l - \sqrt {{a^2} + y_2^2} } \right)}}{{\Delta t}}$
${v_e} = \frac{{\sqrt {{a^2} + y_2^2} - \sqrt {{a^2} + y_1^2} }}{{\Delta t}}$
$ \Rightarrow {v_e} = \frac{{\sqrt {{a^2} + {{({y_1} + \Delta y)}^2}} - \sqrt {{a^2} + y_1^2} }}{{\Delta t}}$
$ \Rightarrow {v_e} \approx \frac{{\sqrt {{a^2} + y_1^2 + 2{y_1}\Delta y} - \sqrt {{a^2} + y_1^2} }}{{\Delta t}}$ (assuming $\Delta t$ to be very small which means $\Delta y$ is also very small)
$ \Rightarrow {v_e} \approx \frac{{\sqrt {{a^2} + y_1^2} {{\left( {1 + \frac{{2{y_1}\Delta y}}{{{a^2} + y_1^2}}} \right)}^{1/2}} - \sqrt {{a^2} + y_1^2} }}{{\Delta t}}$
$ \Rightarrow {v_e} \approx \frac{{\sqrt {{a^2} + y_1^2} \left( {1 + \frac{1}{2}.\frac{{2{y_1}\Delta y}}{{{a^2} + y_1^2}}} \right) - \sqrt {{a^2} + y_1^2} }}{{\Delta t}}$