What action should the driver take to signal pupils that it is safe to cross?

Waving an arm is the correct action for signaling pupils that it is safe to cross the street. This physical gesture is clear and visible, making it an effective way for a bus driver to communicate with students, especially in situations where verbal communication may not be possible due to distance or noise. The wave can grab the attention of pupils waiting to cross, ensuring they know it is safe to do so.

In comparison, blowing the horn could cause confusion or be interpreted as a warning rather than an invitation to cross. Signaling with a flashlight may not be suitable in daylight conditions and could also lead to miscommunication. Using a stop sign is essential for stopping traffic, but it does not specifically signal to the pupils that it's safe for them to proceed. Therefore, waving an arm stands out as the best method for conveying safety to crossing students.