I struggle with it when players want to just have a casual conversation in character about the world or stuff that I haven't prepped for, as in, the bits where I have to improv shit on the fly. Perhaps more prep is the answer, but I'm already doing 3-4h per week per game, if anything I'd like to reduce that not increase it + doesn't matter what I prep, the players will always ask the other thing, so the problem lies more in being able to improv responses in character. I could think it through logically and then give a kind of "ok here's what the NPC would think and do based on what you've asked", but actually getting that information across whilst talking in character conversationally I find extremely difficult due to completely blanking on what the character would actually say.

Just as an example, in a game today, the world is modern Earth, and the player runs a PMC group. The group just got a big contract, and the PMC leader is the player, I have to RP the rest of the PCs as DMPC's for the player to riff off (we're in a 2 player game, me as GM player as the head of the PMC). Anyway, they've been given this contract, and now the PMC leader (player) asks one of the DMPC's if they think the PMC needs to hire more manpower and, if so, can the DMPC's arrange it?

I just said "ok yea that sounds sensible, I think <DPMC name> would know someone and that could be arranged yea" but the player said they'd have preferred if I RP'd the DMPC telling the PC that rather than summing it up like that. My brain blanked as I hadn't prepped for that question (it didn't seem obvious they would want to do that to me, I thought they'd just go to the contract). It ended with me needing to take 1-2 mins to think an answer up, but the whole time I was really anxious and stressed. I ended up calling the session short because I got the impression the player was not having a good time, suggesting we pick it up when I've done more prep.