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Can we say "happy" in sentences like "Happy reading!" is a verb and means "enjoy"? If not, what is that?

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The sentence, "Happy reading!" is the same as "I wish that you have happy reading!" The I wish that you have is understood. In English we say, "Happy Holidays" which means we want you to have a happy holiday season. We're just lazy like that!

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In:

happy reading

"happy" is an adjective that qualifies the noun "reading". "Happy" cannot be a verb, there's no verb in that sentence but the verb "have" is implied:

I wish you have a happy reading,

meaning : "I wish you enjoy your reading."

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No happy isn't a verb. It is an adjective. The fact is that the statement happy reading actually means I wish you will/did enjoy your reading... P.S. Remember that happy isn't a verb. It's an adjective.

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