A: Yes! God absolutely wants us to be happy.
St. Irenaenus said "The glory of God is man fully alive" and Christ Himself said "I have come so that they may have life and have it in abundance" (Jn 10:10). So God does want you to be happy, or better yet Blessed. Of course, being blessed (happy) isn't always what we tend to think of as "happy." Christ sums up what it means to be happy in His Sermon on the Mount (see Matthew chapters 5 - 7).
Living a stress free, no problems life isn't the key to Earthly happiness. Money, fame, and power cannot, ultimately make us happy (how many Hollywood stars have all these yet turn to drugs and even suicide in their unhappiness?) The key to Earthly happiness is conformity to the Divine Will.
St Josemaria Escriva sums this up when he said,
"If things go well let's rejoice, blessing God who makes them prosper. And if they go wrong? Let's rejoice, blessing God, who allows us to share in the sweetness of the Cross." (The Way, 658)Which is an excellent expansion on what St. Paul taught to the Philippians, "Gaudete in Domino semper, iterum dico: gaudete! - Rejoice in the Lord always, I say it again, Rejoice! (4:4)
Or, as our Holy Father has implored us, "Don't be a pickle pepper face Christian!"
We can have this attitude, indeed must have this attitude, because, "we know that in all things God works for the good of those who love him" (Rom 8:28) and, even more so, because "He is Risen!" (Matt 28:6), which is the Gospel, the "good news", and we, as Christians, are people of the good news. With Christ risen, how can we fail to rejoice?
How can we do this in the midst of death and pain and suffering and failure? St. Josemaria again gives us the answer, this time echoing St. James,
"You ask me to suggest a cure for your sadness? I'll give you a prescription from an expert adviser, the apostle St. James: 'Tristatus aliquis vestrum?' - 'Are you sad my son?' 'Oret!' - 'Pray!' Try it an you will see." (The Way, 663)
Can it be hard to gain this serenity, this happiness, this blessedness? No, it's not hard, it's impossible - without God. But with Christ all things are possible (cf. Phil 4:13), as long as we abide in Him (Jn 15:4).
Therefore, let us REJOICE! and Be Glad! Deus Vult - God wills it!