We are given:
\[
Z = 1 + \frac{1}{i}
\]
To simplify \( Z \), we know that \( \frac{1}{i} = -i \), so:
\[
Z = 1 - i
\]
Now, we need to find \( Z^2 \):
\[
Z^2 = (1 - i)^2 = 1^2 - 2 \times 1 \times i + (-i)^2
\]
\[
Z^2 = 1 - 2i - 1 = -2i
\]
Thus, \( Z^2 = -2i \), so the correct answer is \( 4 \).