Answer
a)
If the investment accelerator is large, then the increased output will increase the amount of investment in the economy. If the investment accelerator is small, then the level of investment in the economy might decrease (since the interest rate would increase).
Work Step by Step
b) This fiscal policy would increase the aggregate demand, the money demand, and the interest rate. Thus, the larger the sensitivity to the interest rate there will be (due to the fiscal policy). Thus, the fiscal policy would be more likely to lead to a short-run investment increase when the interest sensitivity is small. (If the sensitivity was large, then the change in investment would be cancelled by the the accelerator effect.)
