Is "Wie geht's (dir)?" actually supposed to be answered?
As far as I know, How are you? is not supposed to be answered : In most of the cases it just means hi!.
Question: Regarding the closest German equivalent to a literal translation, i.e.
Wie geht's (dir)?
should this question be answered?
 I've never lived in an English speaking country, so correct me if I'm wrong
I have to add that I feel a bit pressured if colleagues ask me that when they just want to say hi. I feel an urge to respond but I don't want to lie on the one hand and I don't want to elaborate on the matter either because, you know, we're not friends and we won't be talking anyway. So I actually get a little tiny bit discomforted by it. If you mean "Hi" then say "Hi" ... or just say "Alles gut". Then I can just say "yes." which might be a lie too but I don't have to fill the lie with content. I just have to say "yes". Others might find "Alles gut" a bit presumptive though :)
I think an answer of sorts is expected, just not a long (or necessarily honest) one, so "Great! How are you?" might be an appropriate reply. Unlike the British "How do you do?" it _is_ a full-blown question, though.
@c.p. "How are you" is certainly supposed to be answered. I guess you're thinking of "how do you do".
"how are you?" as some sort of greeting regularly derails my train of thought, too, when talking to native english speakers. In my experience it's supposed to be polite, but an honest answer is not expected or is even considered rude. So in the end it appears to only be a Floskel, and a superficial at that. The key to overcoming that "hurdle" in conversation seems to be to train a reflex like "Fine, thanks. How are you?"
Yes, if you are greeted with Hey, wie geht's dir?, there is usually an expectation to receive a reply:
Danke, gut! Und dir?
Geht so, und selbst?
Or if you do not want to return the question, simply:
+1 for `Geht so` since no native German would answer the question in a positive manner.
`Wie immer` is what I replay to someone I already know. My opponent doesn't really expect a long answer.
`no native German would answer the question in a positive manner.` ? What great nonsense.