There are clouds in the air should also be accepted

It's 'हैं' - are - that gives away the fact that बादल is plural in this case. If it was in the singular it'd be है - is.

I was wondering how you can tell from the Hindi that clouds is plural? I put the cloud is in the air and was marked wrong.

Is हवा also used to convey the concept of what we breathe (oxygen) in every day lingo?