Answer:
To preserve cultural homogeneity.
Step-by-step explanation:
At its roots, a nation is a group of people who identify under similar characteristics and operate under a central government. There is more to it than that, but that's a good foundation. To ensure that all people share these characteristics, citizen tests make potential immigrants learn key characteristics of the nation they intend to inhabit. In a micro scale, think of the government as someone's home. One would only invite someone else in if they were confident the person coming in knew how to behave in a home. A citizenship test is the way of ensuring that.
Why English? English is not an official language, but it is spoken by the majority and so knowing English will help one integrate within society.
Why American Government knowledge? Some of it, truthfully, is very complex. It is not a perfect system and some of this knowledge is designed to keep people out. On the flip side, some of it comes down to wanting people to know how the law works in the U.S.A.