Step 1: Understanding inputs and outputs.
A 4-bit multiplier has two 4-bit inputs. Therefore, total input bits = $4 + 4 = 8$ bits.
Step 2: Calculating number of input combinations.
Number of possible input combinations = $2^8 = 256$.
Step 3: Determining output size.
Multiplying two 4-bit numbers produces an 8-bit result.
Step 4: Calculating ROM size.
Each of the 256 input combinations stores an 8-bit output.
Total ROM size = $256 \times 8 = 2048$ bits = $2$ Kbits.
Step 5: Final conclusion.
Therefore, the amount of ROM needed to implement a 4-bit multiplier is 2 Kbits.