What must you do when you see a stopped school bus with its red lights flashing?

Answer: C — Stop

When you see a stopped school bus with its red lights flashing, it is required by law to stop your vehicle. This is to ensure the safety of children who may be getting on or off the bus. Option A is incorrect because you must come to a complete stop, not just proceed with caution. Option B is incorrect because you must stop regardless of whether or not you see children crossing. Option D is incorrect because honking may startle the children or distract the bus driver. It is important to follow all traffic laws and exercise caution when sharing the road with school buses.