Rules of the Road: INLAND ONLY While underway and in sight of another vessel a mile ahead you put y...

Yes that is correct. Rule 34 INLAND cites a distance of 1/2 mile where signals become necessary.

However, even if the question said 1/4 mile (A) would still be the answer since the operating astern signal does not need to be answered . NB: "On hearing the one or two blast signal of the other shall, if in agreement, sound the same whistle signal and take the steps necessary to effect a safe passing." There is no mention of a reply for operating astern signal.

You are wrong......The answer would change to C if the question said 1/4 mile. The Answers reference YOUR obligation, not the other vessels obligation to answer the signal. The scenario would become in sight and within 1/2 mile of each other.

folks the vessel is a mile ahead, you are behind the other vessel and operating astern, there is no risk of collision, you are not within 1/2 mile of each other even if you are in sight, rule 34(a)i "Inland Only"

inland rules only apply within 1/2 a nautical mile (1000 yards)