For the AB exam, it seems parametric equations are not required. I remember this question when prepping for the BC a few weeks ago. In essence, you would use the distance formula. You might need this for the test tomorrow, so I will just post how I thought about the question.
The rigorous way to do it involves the distance formula. The question mentions distance from the origin to a point on the graph xy = 4. We have two points, (0,0) and the point on the graph, so we have an idea that we need to use the distance formula. Points on the graph are (x, 4/x). The distance between (0,0) and (x,4/x) as a function of x is:
\text{distance}=d(x)=\sqrt{x^2 + (4/x)^2}
We want to minimize this, so take the derivative and set it equal to 0:
d \single-slash (x) = \frac{2x + 2(4/x)(-4/x^2)}{2\sqrt{x^2 + (4/x)^2}} = 0
This is 0 when the numerator is 0, so
x - 16/x^3 = 0 \implies x^4 = 16 \implies x = \pm 2
At this point, we should technically find the second derivative to confirm it's a minimum, but this is a multiple choice test, and we're pretty sure this is a minimum, since there are no other critical numbers. Use the distance formula to find the minimal distance.