Yes, I think you could get a 3x4 setting with 2 yards.
I considered the width of fabric to be 40-42" after selvedges are removed. A 5" wide strip across the width of fabric should yield the four 4 1/2" and four 5" squares needed for 1 block (and up to 4 of the 1 1/2" squares depending on width of fabric). For 12 blocks (3x4 setting), you'd need 60" of fabric length (5" x 12). You'd need 144 small squares. Those could all be cut from 6 strips. 6x1.5"=9". 60" + 9" = 69" or 1.92 yards. If you can cut some of the 1.5" squares at the end of the 5" strips, that will help too.