Just came across another lesson on here where they wanted one to translate the French "Le temps est mauvais" into English! So this apparently is a mistake and simply answering "it is bad" should be correct. It makes sense if someone asked about the weather "Quel temps fait-il?" and then you use "Il fait mauvais" because we know they are asking about the weather.
No. You are not correct. This translation is correct because the french 100% use 'il fait....' to describe the weather and therefore immediately and without ambiguity understand you mean to say the weather is bad. Le temps est mauvais is a secondary option but to reference todays weather and todays weather alone, just say il fait____.