The correct answer is - (2) decreases and runoff increases.
When there's a rainstorm that brings in a very large amount of rain, the soil very often becomes saturated (depending on the type of soil, some quicker some need much more time and water), so the infiltration starts to decrease, and the runoff increases. This is because the soil is limited in how much water it can absorb, and once the limit is passed it is not able to take anymore water in it, and that means that the water starts to run on the surface or just few few centimeters deep into the soil. Very often, because of this, landslides and mud-flows appear, and they usually have devastating effects.
