Final answer:
The government needs to establish levels of tax revenue and to produce national statistics in relation to the business of a sole trader. These functions ensure efficient revenue generation and help measure economic performance to guide government economic policy.
Step-by-step explanation:
In relation to the business of a sole trader, two key actions the government and its agencies need to be able to perform are Establish levels of tax revenue (A) and Produce national statistics (C). The ability to determine appropriate tax levels ensures that adequate revenue is generated to fund public services and infrastructure without overly burdening businesses. Producing national statistics allows for the assessment of economic performance and the planning and implementation of economic policy at the national level.
The government plays a role in the U.S. free enterprise system by establishing and adjusting tax rates over time as part of its economic policies. This includes personal income tax, employment tax, unemployment compensation, social security insurance, and excise tax, which generate revenue for public expenditures and influence the economy. Businesses also comply with regulations that the government sets to achieve economic goals such as growth, stability, and equity, among others.
Taxes have a significant economic impact by providing the government with funding necessary for public goods and services. However, they also represent a burden to taxpayers, implying a need for careful consideration of their efficiency and effectiveness. If taxes are set too high, they may hinder business growth or have other negative consequences on the industry being taxed.