What effect does evaporation have on the temperature of a liquid?

Evaporation is a process where molecules at the surface of a liquid gain enough energy to overcome intermolecular forces and transition into the gaseous phase. This process requires energy, which is drawn from the remaining liquid. As the molecules with higher kinetic energy (and therefore higher temperature) leave the liquid, the average kinetic energy of the remaining molecules decreases. Since temperature is a measure of the average kinetic energy of the molecules in a substance, this drop in average kinetic energy leads to a decrease in the temperature of the liquid.

This phenomenon is commonly observed when you sweat. As sweat evaporates from the surface of your skin, it cools your body down because heat is lost from the skin to facilitate the phase change from liquid to vapor. Thus, evaporation is indeed associated with a cooling effect on the remaining liquid, which is why the answer is that it decreases the temperature of the liquid.