I usually respond to that with, "No, I'm not happy. Casey just dumped all her food on the floor." Or whatever the case may be. Jack goes back to chirping, "Happy? Happy? Happy? Why aren't you happy, Mommy?" Then Casey starts in with her repetition of the word happy. I wish I could describe exactly how they say it, but I guess "chirping" is the best description.
It irritates me when they start doing it but by the time they are both repeating "Happy?" over and over again, all I can do is start smiling and start to laugh at them. And then I really am happy again. The 3 year old and 20 month old have won again. It's amazing that they can take my bad mood and change it so easily. I'm not sure if it's very perceptive of them or just a fun game. Probably more of a fun game...they seem to take great pleasure in saying the word happy over and over again.
It's kind of like how you're supposed to smile when you're not in a good mood and it will start to make you happy. Jack & Casey's twist on it is that they can just be completely annoying and say the word happy over and over again and it will in turn make other people happy. Maybe we could start charging other people for "Happy?" therapy.