Which of the following tools should be used as gauges for leveling and setup work?

The correct choice for tools used as gauges for leveling and setup work is adjustable parallels. Adjustable parallels are specifically designed to provide precise spacing and alignment when setting up workpieces in machining and fabrication processes. They can be adjusted to accommodate various thicknesses, making them versatile for achieving level surfaces and aligning components accurately.

Calipers are more suited for taking measurements rather than supporting or leveling a setup; they typically measure dimensions like depth or diameter but do not provide the necessary stability that adjustable parallels do. Micrometers, while excellent for measuring small distances with high precision, are also not designed for leveling or setting up workpieces. Dial indicators are primarily used for measuring surface variations, such as runout or flatness, rather than for directly providing support and leveling during setup.